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This paper analyzes the relation between public wage bills and public deficits in the OECD countries from 1995 to 2009. The paper shows that fiscal drift episodes, characterized by simultaneous increases in the GDP shares of public wage bills and budget deficits, are more frequent during booms and election years, but not during recessions, except for the 2009 exceptionally strong recession. The emergence of fiscal drift episodes during booms and election years is less frequent in countries with more transparent government, more freedom of the press, as well as in countries with presidential regimes and less union coverage. Inversely, fiscal tightening episodes, characterized by simultaneous decreases in the GDP shares of public wage bills and budget deficits, occur less often during booms than during recessions. The emergence of fiscal tightening episodes during recessions and election years is less frequent in countries with more union coverage.

This paper analyzes the relation between public wage bills and public deficits in the OECD countries from 1995 to 2009. The paper shows that fiscal drift episodes, characterized by simultaneous increases in the GDP shares of public wage bills and budget deficits, are more frequent during booms and election years, but not during recessions, except for the 2009 exceptionally strong recession. The emergence of fiscal drift episodes during booms and election years is less frequent in countries with more transparent government, more freedom of the press, as well as in countries with presidential regimes and less union coverage. Inversely, fiscal tightening episodes, characterized by simultaneous decreases in the GDP shares of public wage bills and budget deficits, occur less often during booms than during recessions. The emergence of fiscal tightening episodes during recessions and election years is less frequent in countries with more union coverage.

This paper analyzes the relation between public wage bills and public deficits in the OECD countries from 1995 to 2009. The paper shows that fiscal drift episodes, characterized by simultaneous increases in the GDP shares of public wage bills and budget deficits, are more frequent during booms and election years, but not during recessions, except for the 2009 exceptionally strong recession. The emergence of fiscal drift episodes during booms and election years is less frequent in countries with more transparent government, more freedom of the press, as well as in countries with presidential regimes and less union coverage. Inversely, fiscal tightening episodes, characterized by simultaneous decreases in the GDP shares of public wage bills and budget deficits, occur less often during booms than during recessions. The emergence of fiscal tightening episodes during recessions and election years is less frequent in countries with more union coverage.

This paper analyzes the relation between public wage bills and public deficits in the OECD countries from 1995 to 2009. The paper shows that fiscal drift episodes, characterized by simultaneous increases in the GDP shares of public wage bills and budget deficits, are more frequent during booms and election years, but not during recessions, except for the 2009 exceptionally strong recession. The emergence of fiscal drift episodes during booms and election years is less frequent in countries with more transparent government, more freedom of the press, as well as in countries with presidential regimes and less union coverage. Inversely, fiscal tightening episodes, characterized by simultaneous decreases in the GDP shares of public wage bills and budget deficits, occur less often during booms than during recessions. The emergence of fiscal tightening episodes during recessions and election years is less frequent in countries with more union coverage.

This paper analyzes the relation between public wage bills and public deficits in the OECD countries from 1995 to 2009. The paper shows that fiscal drift episodes, characterized by simultaneous increases in the GDP shares of public wage bills and budget deficits, are more frequent during booms and election years, but not during recessions, except for the 2009 exceptionally strong recession. The emergence of fiscal drift episodes during booms and election years is less frequent in countries with more transparent government, more freedom of the press, as well as in countries with presidential regimes and less union coverage. Inversely, fiscal tightening episodes, characterized by simultaneous decreases in the GDP shares of public wage bills and budget deficits, occur less often during booms than during recessions. The emergence of fiscal tightening episodes during recessions and election years is less frequent in countries with more union coverage.

The Consequences of Reductions of Employer's Social Contributions on Employment.The general reduction of employer social contributions on low wages is the main employment policy in France with an annual expenditure of about 1 per cent of GDP. This study shows that low skilled jobs in services are the main beneficiaries of this measure. We estimate that removing the part of this relief linked to the 35-hour week would destroy about 400,000 jobs ; lowering the exit point of the measure to 1.5 instead of 1.6 times the minimum wage would eliminate about 50,000 jobs ; restricting the relief to the industry would result in a loss of about 700,000 jobs ; and restricting the relief to businesses with fewer than 50 employees would destroy about 380,000 jobs. Thus, from the point of view safeguarding employment there is no basis to restrict the benefit of the relief only to sectors directly exposed to international competition, or to SMEs only. ; Les allègements généraux de cotisations patronales sur les bas salaires constituent la principale politique de l'emploi en France avec une dépense annuelle d'environ 1 point de PIB. Cette étude montre que ce sont surtout les emplois les moins qualifiés dans les services qui bénéficient aujourd'hui de ce dispositif. Selon nos estimations, supprimer les allègements liés aux 35 heures détruirait environ 400 000 emplois, instituer un point de sortie à 1,5 au lieu de 1,6 Smic supprimerait environ 50 000 emplois, limiter les allègements à l'industrie entraînerait une perte de l'ordre de 700 000 emplois, et limiter les allègements aux entreprises de moins de 50 salariés supprimerait environ 380 000 emplois. Ainsi, du point de vue de la sauvegarde de l'emploi, il n'y a aucun fondement à réserver le bénéfice des allègements aux seuls secteurs directement exposés à la concurrence internationale, ou encore aux seules PME.

The Consequences of Reductions of Employer's Social Contributions on Employment.The general reduction of employer social contributions on low wages is the main employment policy in France with an annual expenditure of about 1 per cent of GDP. This study shows that low skilled jobs in services are the main beneficiaries of this measure. We estimate that removing the part of this relief linked to the 35-hour week would destroy about 400,000 jobs ; lowering the exit point of the measure to 1.5 instead of 1.6 times the minimum wage would eliminate about 50,000 jobs ; restricting the relief to the industry would result in a loss of about 700,000 jobs ; and restricting the relief to businesses with fewer than 50 employees would destroy about 380,000 jobs. Thus, from the point of view safeguarding employment there is no basis to restrict the benefit of the relief only to sectors directly exposed to international competition, or to SMEs only. ; Les allègements généraux de cotisations patronales sur les bas salaires constituent la principale politique de l'emploi en France avec une dépense annuelle d'environ 1 point de PIB. Cette étude montre que ce sont surtout les emplois les moins qualifiés dans les services qui bénéficient aujourd'hui de ce dispositif. Selon nos estimations, supprimer les allègements liés aux 35 heures détruirait environ 400 000 emplois, instituer un point de sortie à 1,5 au lieu de 1,6 Smic supprimerait environ 50 000 emplois, limiter les allègements à l'industrie entraînerait une perte de l'ordre de 700 000 emplois, et limiter les allègements aux entreprises de moins de 50 salariés supprimerait environ 380 000 emplois. Ainsi, du point de vue de la sauvegarde de l'emploi, il n'y a aucun fondement à réserver le bénéfice des allègements aux seuls secteurs directement exposés à la concurrence internationale, ou encore aux seules PME.

The Consequences of Reductions of Employer's Social Contributions on Employment.The general reduction of employer social contributions on low wages is the main employment policy in France with an annual expenditure of about 1 per cent of GDP. This study shows that low skilled jobs in services are the main beneficiaries of this measure. We estimate that removing the part of this relief linked to the 35-hour week would destroy about 400,000 jobs ; lowering the exit point of the measure to 1.5 instead of 1.6 times the minimum wage would eliminate about 50,000 jobs ; restricting the relief to the industry would result in a loss of about 700,000 jobs ; and restricting the relief to businesses with fewer than 50 employees would destroy about 380,000 jobs. Thus, from the point of view safeguarding employment there is no basis to restrict the benefit of the relief only to sectors directly exposed to international competition, or to SMEs only. ; Les allègements généraux de cotisations patronales sur les bas salaires constituent la principale politique de l'emploi en France avec une dépense annuelle d'environ 1 point de PIB. Cette étude montre que ce sont surtout les emplois les moins qualifiés dans les services qui bénéficient aujourd'hui de ce dispositif. Selon nos estimations, supprimer les allègements liés aux 35 heures détruirait environ 400 000 emplois, instituer un point de sortie à 1,5 au lieu de 1,6 Smic supprimerait environ 50 000 emplois, limiter les allègements à l'industrie entraînerait une perte de l'ordre de 700 000 emplois, et limiter les allègements aux entreprises de moins de 50 salariés supprimerait environ 380 000 emplois. Ainsi, du point de vue de la sauvegarde de l'emploi, il n'y a aucun fondement à réserver le bénéfice des allègements aux seuls secteurs directement exposés à la concurrence internationale, ou encore aux seules PME.